The Time is Now to Designate JWA a US Port of Entry

Jun 30, 2015

By: Edwin Fuller
Founder and President of Laguna Strategic Advisors

Any reader of my blog knows I travel a lot. It’s part and parcel of the travel and hospitality business. When it’s efficient, and the customer comes first, travel is a joy. When it’s not efficient and the customer isn’t a priority, I can’t help but wonder what keeps this hotel, this restaurant, this train station, this airport from being its very best.

There are lots of different barriers that stand in the way of a truly first-class travel experience. Maybe front-line staff haven’t been empowered to solve problems. Perhaps a facility is aging and needs a face-lift. But, sometimes it’s the government that gets in the way. We know how to fix the first two, but the last one? That can be maddeningly hard to solve.

Take my hometown airport John Wayne Airport, Orange County (JWA). I enjoy traveling through JWA. It’s a medium-sized hub airport, delivering visitors right to the heart of Southern California. It offers a wide range of air service by most major carriers. Its facilities are modern and well maintained. I can get from the curb to the gate in minutes. Visitors love the fact that they are close to all “The OC” has to offer: beautiful beaches, world-class shopping, great hotels, fabulous restaurants—and Disneyland is a hop, skip and a jump away.

Historically, JWA offered only domestic air service. In 2011, pre-cleared flights from Vancouver started and, a year later, with the opening of a new terminal, flights to and from Mexico were offered for the first time. JWA’s fledgling international air service now generates more than 200,000 passengers annually. The Mexico flights alone generate more than $130 million in revenue annually and created nearly 1,000 jobs. That’s right: $130 million from just a few flights a day. The 6th largest county in the country with over three million residents now benefits from a job-generating, economic boost thanks to JWA’s nonstop service to Cabo San Lucas, Mexico City and Vancouver.

So, how is the government preventing this terrific airport from providing a truly first class experience and putting its customers first? The answer is phenomenally and frustratingly simple. US Customs and Border Protection (CBP) has put—and refuses to remove—a huge roadblock in JWA’s way.

Here’s the situation. JWA started its international service under what CBP calls the “Small Airport User Fee Program.” User Fee Airports have to reimburse CBP for 100% of the cost of federal inspection services. Those costs are, under federal regulation, passed on to the airlines that receive those services and at JWA, they have resulted in more than $4 million in operating expenses that aren’t charged at LAX, Ontario, Sacramento, San Diego, Oakland, San Jose and a host of other airports across the country. These airports are designated as Ports of Entry where the federal government is responsible for funding the required inspection services.

Furthermore, the truth is that the CBP is actually being paid twice for the same service at JWA. The airport is required to pay 100% reimbursement for inspection services while the CBP continues to collect the normal service fees charged all international passengers arriving in the US.

So you may ask, why doesn’t JWA operate as a Port of Entry? Because the CBP won’t allow it. Why? There’s no good reason. Even though JWA meets the criteria required to be a Port of Entry, CBP won’t allow it. Even though the Orange County Business Council, Orange County Visitors Association, the Disneyland Resorts, US Travel, CalTravel and Orange County’s Congressional delegation all support the designation, CBP won’t allow it.

CBP’s unwillingness to do the right thing at JWA is particularly surprising in light of President Obama’s endorsement of travel and tourism and the industry’s importance to the overall US economy. Back in 2012, the White House issued a press release titled: “We Can’t Wait: President Obama Takes Actions to Increase Travel and Tourism in the United States.” Just last year, from the Baseball Hall of Fame in Cooperstown, the President again highlighted the critical role of travel and tourism in growing the national economy.

The fact is that CBP should support the President’s directive to facilitate international tourism. It should allow JWA to operate on a level playing field with other international airports in California and the nation. It should let the Airport do what it does so well: provide a terrific travel experience to domestic and international travelers by designating JWA as a Port of Entry.

I know this is a parochial plea about one airport—my airport—located in one community. It’s important to remember, however, that any business that wants to be successful globally must be successful locally. The hospitality business knows only too well that an efficient and positive customer experience is built one restaurant, one hotel, one airport at a time. JWA may be just one airport but it rests at the foundation of Orange County’s economy and of this country’s commitment to facilitating international travel and tourism. The time is now for JWA to be designated a Port of Entry.